Brokering the sale of a business is a lot like brokering real
estate, except for one major difference: Selling a business is
generally tougher. That's because the seller of an ongoing
business faces an interesting conundrum. On one hand, the seller
would like all qualified buyers to know the business is for sale.
On the other hand, if a potential seller's competitors,
customers and employees learn of this intent, the ensuing drama
could ruin the business before it can be sold. So rather than
putting a "for sale" sign in the front yard, many sellers
turn to VR Business Brokers, the franchise chain that holds the top
spot in the "Business Brokerage" category in
Entrepreneur's 2001 Franchise 500Â® and whose logo claims
it "has sold more businesses in North America than
anyone."

VR Business Brokers brings business owners and potential buyers
together, but, ironically, the concept itself has been sold to more
than its share of franchisors, changing owners three times since it
started brokering business sales in 1979. The most recent in this
string of owners, which includes one bankruptcy in 1991, bought the
rights to manage and franchise the chain in June 1999.

The latest CEO, Richard Brinkley, and his team purchased the
company for only $725,000-$300,000 in cash and a note for the
balance. The note has a balloon payment of $213,600 due in 2003,
which is followed by another balloon payment of $195,500 in 2004.
During fiscal 1999, the franchisor lost $131,841 on total revenue
of $553,947.

It would be inappropriate to form any conclusions from these
facts, but if I were going to join VR Business Brokers as a
franchisee, I'd like to know how it plans to remain solvent
over the next few years. Regardless of ownership turmoil,
franchisees Connie and Bill Womack in Arlington, Texas, say
they've been able to make a good living in the system. Connie,
who has been involved with VR Business Brokers as a franchisee,
master franchisee or employee since the beginning, says the key to
the franchise's success is adaptability. For example, though
most of the Womacks' business currently comes from referrals,
VR Business Brokers' strong Web presence has changed the way
buyers and sellers find each other.

Operations at VR Business Brokers centers have changed as well.
In past years, the franchisor promoted the idea of large offices
with a number of sales associates. Now many franchisees are working
in solo offices. Smaller is a trend throughout the franchise system
as a whole. In the late '80s, about 300 franchisees were in the
system; today, that number is down to only 60 operating locations
in North America (though more locations are slated to open).

Avoid the tunnel vision of focusing only on million-dollar
businesses. In fact, most of the businesses sold by VR Business
Brokers are valued at less than $500,000-$150,000 per
transaction is a rough average for the system. Even at these
levels, the potential is intriguing, as franchisees typically
retain an 8 to 14 percent commission on the sale of any given
business. Smaller sales are subject to a minimum fee determined by
each franchisee.

VR Business Brokers offers a number of benefits unavailable to
anyone trying to broker businesses on his or her own-most
notable is Today's Business Owner, a magazine containing
information on businesses listed with the franchisees. In addition,
the franchisor provides all the necessary forms, marketing
materials, ongoing training and Web presence that facilitates a
professional appearance and operation. Assuming the franchisor has
staying power and you have the patience to build a referral network
of small-business owners, this franchise could be intellectually
and financially rewarding for years to come.

The estimated initial investment for this franchise includes
opening and operating the business for the first three months, but
it doesn't account for any salaries.

Todd D. Maddocks is a franchise attorney and small-business
consultant who is presently the CEO of The Worldlink Group. You can
reach him at TMaddocks@aol.com.